Perishability - Marketing Management

Generally, service products cannot be stored. For example, if a restaurant has empty tables, if a hotel room is not booked, or if an aeroplane flies with empty seats, then these services i.e. the tables, rooms or seats that the provider was hoping to fill cannot be ‘stored’ and sold later. The revenue that would otherwise have accrued has been lost for ever. The fact that service products have this high degree of perishability makes effective matching of demand and supply of service products particularly important. This is especially relevant with service products where there are time periods of excess demand and supply. The marketer therefore needs to manage the balance between demand and supply and may adopt devices such as differential pricing, the development of complementary services, effective pre-booking systems and the use of part-time staff to facilitate effective matching of demand and supply.